Southeast Asia Sees Improving Semiconductor Investment into 2014

Southeast
Asia Sees Improving Semiconductor Investment into 2014

By Clark Tseng, SEMI
Taiwan, Industry Research & Statistics

The
semiconductor industry started out quite strong in 2012 but declined rapidly in
the second half of the year resulting in a slight year-over-year decline of 2.7
percent in worldwide semiconductor sales. On the other hand, worldwide capital
equipment market recorded a decline of 15 percent from $43.5 billion in 2011 to
$36.9 billion in 2012 according to the SEMI WWSEMS report. While industry
forecasts for semiconductor revenue trend from mid-to-high single digit growth in
2013, overall capital investment this year may remain conservative. SEMI
expects a flat to single-digit decline trend this year and a strong recovery in
2014.

For
Southeast Asia region, we expect to see capital equipment investment to bottom
out in the first half of 2013 and mild
pickup in the second half followed by a strong recovery in 2014. Overall
front-end fab equipment spending is expected to double next year from $810
million in 2013 to $1.62 billion in 2014. Foundry and Memory are the two major
sectors that invest most in the region. For foundries, Globalfoundries’
expansion plan at Fab 7 will be completed by mid-2014 while UMC continues to
upgrade their Fab 12i capacity to 40nm process.

The
Memory sector represents an even bigger chunk of investment in the region. The
latest SEMI World Fab Forecast data shows that memory is the only sector in the
region to see investment growth this year. Other sectors, such as Power Semiconductor
and MEMS are expected to see meaningful recovery in 2014 contributing to the
overall growth.

Capacity
growth at front-end fab shows 1.7 percent increase this year and an expectation
of higher growth, 8.2 percent, in 2014,
exceeding overall global capacity growth of 5.2 percent according to the SEMI
World Fab Forecast. The growth will
mainly be driven by the Memory sector, specifically from NAND flash capacity as
Micron gears up for further expansion at
its Singapore NAND flash facility next year plus ongoing capacity conversion
from DRAM to NAND flash at Fab 7 (Tech).

Singapore
is emerging to become the third-largest NAND flash manufacturing country in the
world, following South Korea and Japan, by the end of 2014. The conversion and the expansion projects will
drive related semiconductor investment in the region in 2013 and 2014.

For
the Assembly and Test sector, Southeast Asia has long been the focal point of
the industry with a large installed capacity from both IDMs and OSATs. This position contributes to the region being
the largest packaging materials consumption market in the world, representing a
market size of $6.6 billion in 2013 and $6.8 billion in 2014. The region’s
back-end #quipment investment remains significant with over $1 billion spending
each year throughout 2012 to 2014, accounting for about 17 percent of worldwide
share according to the SEMI WWSEMS.

Aside
from manufacturing capacity, the Southeast Asia region is now extending its
value proposition to IC design and R&D areas with more joint development
projects between multi-national corporations (MNC) and local institutes. We
expect to see a more robust semiconductor ecosystem arise from the region as a
result of these endeavors and as companies seek ready access to customers
throughout Asia-Pacific and South Asia.